Recent media analysis of economic developments in Cuba has mostly focused on the island's strong macroeconomic performance, its closer and very profitable business ties with Venezuela, and the national debate on the shortcomings of the socialist system launched by RaM-zl Castro. In effect, considerable skepticism remains on Cuba's claims of a spectacular GDP growth in the past two years, many details on commercial agreements between Havana and Caracas have yet to be disclosed, and speculation is mounting on the kind of reforms that Fidel's younger brother is likely to implement.
As updated Cuban official statistics became available in late July, virtually no one, however, has noticed a new trend in the island's record of its international economic transactions that suggests a dramatic expansion of Cuban donations to other countries.
While humanitarian aid centered on medical diplomacy has been a cornerstone of Havana's foreign policy since Fidel Castro seized power almost five decades ago, the latest donation figures, if confirmed, are truly impressive for a small island with relatively limited resources.
Here is the evidence and my personal interpretation.
Donations to and from abroad are lodged under "net current transfers" in the balance of payments together with remittances. Between 1997 and 2001, Cuba recorded an average annual surplus of about $800 million in current transfers, mostly triggered by a growing inflow of family remittances primarily sent by Cuban Americans. The Cuban Central Bank put the value of these transactions at $974 million in 2004, indicating a further increase of overseas remittances. Until then, the overall contribution of inward/outward donations to net current transfers was apparently so small that several scholars considered this balance-of-payments category as an actual indicator of remittances to Cuba.
But in 2005, for the first time in more than a decade, Cuba recorded a deficit of $367 million under net current transfers. Although remittances from abroad might have suffered a decline that year as a result of the Bush administration's new restrictions on Cuban-American travel and money transfers to Cuba introduced in June 2004, the most plausible explanation for the aforementioned deficit is an astounding rise in donations provided by Cuba to other countries.
Assuming that remittance inflows fell by approximately 30 percent as estimated by some unofficial sources, Cuba would have made donations worth more than $1 billion in 2005. Just to put things into perspective, this figure is nearly half of Cuba's revenues from international tourism, greater than its earnings from all major export products except nickel, and obviously greater than current levels of remittances from abroad.
Granted, it is very difficult to reliably assess the accuracy of Cuban statistics. In 2005, the Castro government abandoned the standard method used to measure economic activity and replaced it with a new formula that assigns an undisclosed value-added to subsidized social services (health care, education, sports) provided by the Cuban state, not only to its population but also to citizens of other countries. Cuba's donation record has likely been boosted by the adoption of this new formula because the vast majority of Havana's international assistance is in the form of medical services within the context of health cooperation programs. Moreover, Cuba reported a surplus of $277 million in net current transfers in 2006, which suggests that donations decreased sharply last year.
Whatever the exact value of Cuban donations, there is little doubt that the communist island has recently stepped up its international-aid efforts. Leaving aside the special agreements with Venezuela and the material payoffs (oil-for-doctors exchanges, joint investments, and credit availability) for Cuba, thousands of Cuban professionals are currently staffed in medical clinics and other social ventures in 101 countries worldwide, mainly in Latin America, Africa and East Asia.
Even more important, Cuba has provided disaster relief to a number of countries ravaged by natural calamities in 2005, including help to Guyana after severe flooding and assistance to post-tsunami Indonesia and post-earthquake Pakistan. Only in Pakistan, Cuba sent about 2,300 highly experienced doctors, nurses, and medical technicians to work in the earthquake-stricken zone and refugee camps.
In short, shedding light on Cuba's alleged economic growth, discussing its future, and pointing out the undeniable material benefits Havana is reaping from exports of professional services to Venezuela are useful exercises.
But humanitarian aid activities also deserve some serious attention as Cuban donations, despite the limitations of official statistics, might indeed have reached a level never seen before.
Paolo Spadoni is a visiting assistant professor in the department of political science at Rollins College in Winter Park. He wrote this commentary for the Orlando Sentinel.